No state immune to liability stress

Doctors in some states with liability reform give up high-risk procedures, and physicians elsewhere feel mounting pressure to keep reforms intact.

By Tanya Albert Henry — Posted Aug. 23, 2004

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Someone assessing the practice particulars of Lynda Smirz, MD, might conclude that middle-of-the-night phone calls during a Midwestern snowstorm contributed to the Indiana obstetrician-gynecologist's decision to give up delivering babies.

But it was medical liability insurance rates that forced the doctor who delivered the nation's first surviving sextuplets in 1993 to give up a beloved part of her job this year.

Indiana is one of six states that physicians point to as having established tort reform, so it is surprising that insurance rates drove Dr. Smirz out of obstetrics. But Indiana physicians this year got socked with a 72.6% increase in the amount they have to pay into a patient compensation fund.

Doctors in Indiana and other states that the American Medical Association says are not showing signs of a medical liability insurance crisis know they have it better than colleagues in states without tort reform. Still, in some cases doctors are starting to see rates hit levels that are not financially feasible, given reimbursement rates from Medicare, Medicaid and private insurers.

In addition to Indiana, doctors in tort-reform friendly New Mexico and Louisiana say they are seeing some colleagues begin to retire early or give up high-risk parts of their practice.

In California, Wisconsin and Colorado -- the other states with effective tort reform -- doctors are fighting to ensure that reforms stay intact so doctors won't be forced to make practice choices based on insurance rates.

"We're certainly monitoring what is going on in the states on a continuing basis," said AMA Trustee Rebecca J. Patchin, MD, chair of the AMA Task Force on Medical Liability Reform. "Tort reform is our No. 1 priority."

In Dr. Smirz's case, insurance to practice obstetrics and gynecology cost $26,000 in 2003. It would have cost $49,000 this year to practice both versus $23,000 to practice only gynecology. She was delivering three to five babies a month -- a number that made it hard to justify paying out that much in insurance to continue obstetrics.

"It's not a decision I wanted to make," said Dr. Smirz, who also earned her MBA. "But I can't afford to do it anymore."

Concern rising

No one knows exactly how many physicians in Indiana chose to give up high-risk portions of their practice or retire early after the state raised the amount that physicians are required to contribute to a fund that pays medical malpractice awards that exceed the amount physicians' insurance covers.

The increase came after a state review indicated that the fund was not collecting enough money for future payouts. A review hadn't been completed in several years, and in the meantime the state's cap on economic and noneconomic damages had been raised to $1.25 million.

Some physicians say that they are seeing a significant fallout.

Portland, Ind., family physician Kathleen Galbraith, MD, who chairs the Indiana State Medical Assn.'s board of trustees, is one of only two physicians doing obstetrics in Jay County. There used to be five.

In addition to the surcharge increase, insurers moved family physicians into a higher risk category in which base premiums were higher, she said.

"We are better off than colleagues in other states," said Dr. Galbraith, who lives 10 miles from the Ohio border. If she practiced in Ohio, her premium would be three times as high. "But are we as well off as we were five years ago? No."

If things keep going the way they have the past couple of years, she worries that more physicians will be forced to retire early or give up parts of their practice.

"My Ohio colleagues have it much worse, but we are catching up quickly," Dr. Galbraith said.

An Indiana Dept. of Insurance spokeswoman said it had not yet determined how much doctors will have to pay into the patient compensation fund in 2005.

Meanwhile, doctors in New Mexico are looking at ways to help out physicians -- mainly obstetricians -- who are having a difficult time paying insurance premiums. Rates are lower than in Florida and Pennsylvania, but some New Mexico doctors aren't earning enough to keep up with increases that look modest compared with other parts of the country.

Obstetricians and family physicians delivering babies in the more rural parts of the state, where a large number of Medicaid patients live, have been hit the hardest.

Doctors are working with the governor's office and the Dept. of Human Services to try to increase Medicaid reimbursements for cesarean sections, said New Mexico Medical Society Executive Director Randy Marshall.

"If we could increase the amounts $200 or $300, we believe it would help," he said. "We have the best liability reforms in the nation. The answer to the problem is to increase payments."

Some physicians in Louisiana are giving up deliveries or opting to become employed physicians so that their employer will take care of their insurance.

Numerous doctors doing obstetrics, including Morgan City, La., family physician Robert P. Blereau, MD, saw a 20% increase in premiums last year and are expecting similar hikes this year.

"I always thought giving up OB was very, very distant from me," said Dr. Blereau, whose rates increased to $58,000 this year. "But based on the numbers, it's getting very close to me."

Michael Kudla, MD, who chairs the Louisiana section for the American College of Obstetricians and Gynecologists, said physicians there are working to increase physician compensation and fighting to keep the state's cap intact.

"While we're fortunate compared to other states, liability rates are still having the effect of decreasing patient access to care," he said.

Fighting to keep things stable

Doctors in California, Colorado and Wisconsin are not seeing physicians retire early because they can't afford insurance rates. But defending caps on damages and other reforms is a constant battle.

"We are very, very fortunate to have the things we have," said Evan Saunders, MD, vice chair of the Wisconsin Medical Society's Council on Legislation. "As long as those are in place, we will have a stable medical-legal environment."

The same holds true in Colorado. "When you have caps in place and they hold with the test of time, it really does affect the situation," said Denver ob-gyn and ACOG Vice President Douglas H. Kirkpatrick, MD.

In California, doctors say that tort reforms the Legislature passed in the 1970s commonly known as MICRA are the reason doctors are able to afford their insurance. And even with the caps in place, some doctors are at a point where they can just afford the insurance.

"We have been fortunate to have tort reform, but $50,000 to $60,000 a year for liability insurance is still hard to meet," said Beverly Hills, Calif., ob-gyn Peter Weiss, MD. "You can't pass along increases."

Doctors face a 2005 legislative fight to prevent lawmakers from raising the $250,000 cap on noneconomic damages. If the cap is raised, doctors fear that insurance rates will go higher and become unaffordable.

"We are in tight straits now, but we can make payments," said Daniel Higgins, MD, an emergency medicine physician and president of the Los Angeles County Medical Assn. "But we just don't have that margin to play with."

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It's all relative

Despite some double-digit increases in rates in recent years, states with established reforms, such as damages caps, are still fairing better than states without them. Below is a snapshot of rates that obstetricians-gynecologists paid in 2003.

Lowest rate Highest rate Rate changes 2002-03
California $33,542 $77,814 0% to 54%
Colorado $34,868 $74,948 12.8% to 29%
Indiana $32,510 $46,894 5.1% to 17.3%
Louisiana $68,439 $74,293 23.3% to 23.5%
New Mexico $61,982 $84,348 16.7% to 52%
Wisconsin $23,677 $30,304 -13.8% to 10%
Florida $123,572 $249,196 19% to 49%
Illinois $58,181 $147,023 25% to 50%
Pennsylvania $70,571 $152,730 31.2% to 65.3%

Source: Medical Liability Monitor 2003 Annual Rate Survey. The survey asks companies for mature claims-made manual rates with limits of $1 million/$3 million. The rates do not reflect credits, debits, dividends or other factors that might reduce or increase final premium. Rates also reflect physician payments to patient compensation funds if a state has one.

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